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Contractor's Bankrupt, so who do we pay

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We have a contractor that went bankrupt. days prior to bankruptcy an invoice was submitted for the previous month, but not the work done on the current month. Since they have went bankrupt, they have not invoiced for the remaining days? Do we pay the invoice and let DFAS handle it? Does the $ go to the debtors on the bankruptcy? what do we do about the days there was no invoice. The contract is now expired and we want to de-obligate funds and close out. Has anyone had this experience? 

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You pay the contractor.

The bankrupt contractor may continue to perform the contract.  However, if it abandoned its work, a default termination is in order.  Or, if the contractor completed all if it’s performance obligations, you wait for the final invoice and then pay it.

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If you haven't already see FAR Subpart 42.9-Bankruptcy and clause 52.242-13 for policy.  Also, as it states in the FAR and if you haven't already, you need to contact your legal office right away.

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On 11/5/2018 at 7:13 AM, policyguy said:

If you haven't already see FAR Subpart 42.9-Bankruptcy and clause 52.242-13 for policy.  Also, as it states in the FAR and if you haven't already, you need to contact your legal office right away.

 I agree that you should check with an agency attorney as soon as possible.

However  I did not see where FAR Subpart 42.9 –Bankruptcy and clause 52.242 –13 provide any policy guidance concerning progress or final payments to a firm in bankruptcy. 

 I recently did some pro bono home repair work for a couple who are in bankruptcy. I needed to obtain reimbursement for a plumber that we had to hire and for materials that I purchased to repair their flooded bathroom and hallway.  In their case, an attorney had been assigned by the Bankruptcy Court to manage all of their financial income and make payments to creditors, including their mortgage company.  I had to provide a lot of documentation to the mortgage company holding their delinquent mortgage in order for them to release their homeowners insurance policy claim proceeds to the couple to reimburse the plumber and me. The checks were two party - for example, to the plumber and to the homeowner.

It’s been been a long time since I handled government contract administration with construction contractors working in Bankruptcy, so I don’t remember how we addressed payments to those firms. Where there were replacement firms hired by the Bonding Company (via Takeover Agreements, etc.) we paid them directly. 

Your government attorney should research and advise you on this matter. 

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